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The Canadian dollar rallied on the BOC hike but stalled afterward. What is the next move?

Here is their view, courtesy of eFXnews:

TD FX Strategy Research notes that  USD/CAD has been confined to a four cent range as of late  and this underscores the fact that the pair is looking for fresh impetus given the cross currents of BoC repricing, early signs of USD consolidation and data risks over the next few weeks.

“We still think that the market is overreacting to the so-called BoC jawboning even though the impact is more widely felt in the rates rather than FX space. For instance, market pricing of an Oct hike has dropped to around 37% from a peak of around 54% just last week.  We would not place too much emphasis on the Lane speech, especially since he also played up some of the domestic strengths.

In light of the BoC repricing,  we see increased scrutiny around this week’s CPI and retail sales report and the early Oct trade and employment releases.  A stable core CPI is crucial and would likely favor another push higher in CAD,” TD argues.

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